Integrated offerings morph from luxuries to staples.
Throughout 2021, companies in Asia-Pacific put increasing pressure on their regional banks to provide end-to-end services that maximize working capital. Our pick for Best Bank for Cash Management, for the second year in a row, DBS, has done that by leveraging its digital capabilities.
One such offering that enables real-time cash and liquidity management is virtual account management (VAM). “Immediate settlement and auto reconciliation solutions are now critical for businesses pivoting to—or increasing sales via—digital channels,” notes Rachel Chew, group cash product management head for Global Transaction Services at DBS. “VAM uses unique virtual account numbers assigned to the underlying payers and payees, so corporates can reduce time spent on reconciling their payers and payees to account receivables.”
As the role of treasurer becomes more complex, centralization of business operations is key to success. “Virtual account structures, such as an in-house bank, allow corporates to segregate cash activities under a single, centralized bank account,” Chew adds.
ANZ, 2022’s Best Bank for Liquidity Management, views VAMs as a tool for corporates to vastly improve the efficiency of cash concentration structures. “The ability to naturally offset sub-ledger accounts within a VAM structure significantly reduces unnecessary physical cash sweeps, particularly across complex cash pools with multiple layers of sweeps,” explains an ANZ Transaction Banking spokesperson. “Corporates can take advantage of this.”
For corporates looking at short-term liquidity solutions, the HSBC Jintrust Money Market Fund, which won as Best Provider of Short-Term Investments/Money Market Funds, is an open-end fund incorporated in China, with a Fitch AAA credit rating. By investing cash, bank deposits or certificates of deposit (also known as time deposits) that have maturities of no longer than 397 days and central bank instruments, the fund meets capital preservation and next-day liquidity objectives along with achieving a rate of return comparable to short-term money market interest rates.
According to DBS’ Chew, treasury automation is becoming more widespread in an increasingly digital world. “Treasurers are looking at innovations to help them streamline treasury workflow and automate manual processes, to save time and support business scale.”
She highlights application program interfaces (APIs) as a critical technology in today’s treasury: “APIs are flexible, highly effective tools that make digital transformation seamless and simple, enabling automated real-time treasury solutions.”
DBS employs various technologies to support multiple needs of the treasury function. “At the basic level, digitalization augments business continuity through automation of internal processes and real-time treasury capabilities,” says Chew. “With the rise of instant payments capabilities across Asia, our solutions allow corporates to maximize benefits, such as improved transaction transparency, which in turn helps with efficient working capital cycle and effective client experience. Finally, given the developing use of cryptocurrencies, we’ve leveraged our custody and exchange propositions to provide clients treasury management solutions for digital assets. These are merely some of the ways we have leveraged our technology capabilities to deliver improved value propositions for treasury functions.”
By expanding its instant payments network to 11 markets in Asia-Pacific, Citi, this year’s Best Bank for Payments & Collections, boasts 7,000 clients utilizing its instant payments in the region. With WorldLink Payment Services, they can facilitate domestic and cross-currency payments in 145 currencies and more than 190 countries. The services include POBO (payments on behalf of) capabilities, alerts and notifications of payment status changes and payment risks, payment insights and analytics.
Payments are just one way of improving working capital. Companies will continue to seek banking partners to help businesses free up cash and invest in growth and innovation using digital transformation tools, such as automation, artificial intelligence and analytics. Technology and transformation make the next generation of treasuries a reality.